17500 Cartwright Road
P.O. Box 19559
Irvine, California 92713
Fax: (714) 660-8682
Sales: $159.26 million (1996)
Stock Exchanges: NASDAQ
SICs: 3577 Computer Peripheral Equipment, Not Elsewhere Classified
Irvine, California-based Printronix, Inc. designs, manufactures, and markets a leading line of midrange, high-speed printers and printing software applications used with PC network, minicomputer, and mainframe computing systems. Printronix produces three families of heavy-duty printer systems. The five-member family of ProLine Series 5 line matrix printers, based on patented technology developed by Printronix, offers print speeds ranging from 150 lines per minute up to 1,200 lines per minute. The company’s line matrix printers are especially suited to industrial graphics applications, such as onsite bar coding and order routing, as well as multipart form printing. Printronix’s LaserLine product family hits both the entry-level and top-of-the-line medium-to-high-volume continuous form laser printing markets, producing high quality graphics output at speeds ranging from 24 to 31 pages per minute, or from 50,000 to 250,000 pages per month. The LaserLine printers, which can print on plastics and synthetic materials, as well as any type of paper, use Printronix’s DuraFusion toner process, providing greater document durability. The third family in the Printronix line is its ThermaLine thermal transfer printers, providing on-demand or high-volume label printing at speeds ranging from five to ten inches per second. Printronix also manufactures private-label printers under contract with companies including IBM, Unisys, and Hewlett Packard.
Printronix supports its printers with its Printronix System Architecture (PSA). By unifying the hardware and software base of its printer families, PSA allows application programs to work with any of Printronix’s own printer systems, while providing compatibility with other printer systems. PSA also includes international font packages including Arabic, Hebrew, Greek, Cyrillic, Turkish, and four Kanji fonts for the Japanese, Chinese, Taiwanese, and Korean markets. The company maintains production facilities in Irvine, the Netherlands, and Singapore. In 1996, the company stepped up its focus on the Asian market with construction of a new state-of-the-art facility in Singapore. International sales, which accounted for ten percent of the company’s $159 million in revenues for the year ended March 31, 1996, are expected to drive Printronix’s future growth. Printronix is led by founder, President, and CEO Robert A. Kleist.
From a Garage to Industry Leader in the 1970s
Robert A. Kleist, an electrical engineer who began his career with Ampex, had already co-founded two successful companies—Dartex, a maker of tape transport systems later acquired by Tally Corp.; and Peripheral Business Equipment, later merged with Peripheral Equipment Corp. to form computer-maker Pertec Computer Corp.—before joining with friends and fellow engineers Gordon Barrus, Leo Emenaker, David Mayne, Ray Melissa, and Mel Posin to form Printronix. At the time, minicomputers were the fastest growing computing segment, and increasing numbers of small businesses were integrating computer systems into their operations. The Printronix group recognized a need for a new type of printer that could accompany the minicomputer into the variety of industrial environments while providing high-speed, high-volume print capacity. The team developed a new printer technology that could produce multipart printouts, such as invoices, purchase orders, and paychecks, as well as the recently introduced bar coding systems. Based in Emenaker’s garage, the new company built its first printer, the P300, in 1974.
The P300, which introduced “dot matrix” technology, differed markedly from the printers in use at the time. These were on the whole serial printers, meaning they printed documents one character at a time, much like typewriters. Serial printers presented a number of limitations to manufacturers demanding increasing industrial printing capacity. Serial printers could not be used for multipart forms, could not produce graphics, depended on special paper, and were not suited to the dust, temperature extremes, and other environmental hardships of the typical industrial setting. The P300 abandoned serial printing for Printronix’s line matrix printing. The P300 translated electronic documents into commands driving a bank of tiny hammers to print small, overlapping dots across an entire line. Merging the dots allowed the P300 to print not only letters and numerals, but also lines, charts, and other graphics. The P300 was able to print on a variety of paper types; because it used far fewer moving parts than serial printers, it was especially suited to the industrial environment and offered greater durability, easier repair, and high volume capacity. Priced at $5,000, the P300 was, as Kleist told Dun’s Review, “The closest thing to a universal printer for the minicomputer industry.”
But starting up a new company in the midst of the 1970s recession was risky, and the company struggled for its first two years. Printronix was unable to find investors; instead, venture capitalists, wary of investing in a one-product company, suggested that Printronix needed to develop more variety of printer types to attract large customers. Yet Printronix stood by the P300, convinced that its wide range of features and its suitability to a variety of tasks would make it appealing to a wide range of customers. “A little company,” Kleist told Fortune, “can’t succeed by doing many different things.” To get the company going, the partners raised nearly $700,000 among them, and then later sold two licenses overseas, adding another $500,000.
The next step was finding customers. Unable to afford to hire and train its own sales staff, Printronix instead turned to distributors to sell its products—an unusual move for the computer industry at the time. “We effectively created our own class of large customers by aggregating a lot of little customers under a regional distributor,” Kleist told Fortune. And to Dun’s Review, he added, “It put more salesmen in the field talking to customers than we could have done ourselves, and it not only helped preserve vital capital, but gained us the acceptance our product deserved.” The strategy worked. By 1976 the company was in the black, and by 1977 sales of the P300 had reached 300 units per month, generating revenues of $4.3 million and a $270,000 profit. With this growth, Printronix was able to begin marketing directly to large customers, while maintaining its distributor network for sales to smaller clients. In 1978, Printronix added a second printer, the P600, a line matrix printer capable of doubling the P300 print speed. The company also established a reputation for quality, offering a one-year guarantee instead of the then industry standard 90 days. But the P series proved to be up to the high volume demands placed upon them. Indeed, many of Printronix’s printers would remain in operation for more than 20 years.
Going public in 1979, Printronix quickly built itself into one of the top ten printer makers, taking 15 percent of the market for medium-speed printers by the beginning of the next decade. By then, the company had stepped up its direct sales force, which now accounted for more than half of printer sales. The company also moved to vertical integration, leasing a manufacturing plant in Irvine to build its hammer banks. In March 1981, the company, which already saw foreign sales accounting for nearly 30 percent of total sales, formed a subsidiary in the Netherlands and began manufacturing printers there. Sales by then had nearly tripled, to nearly $37 million. The following year, with sales topping $52 million and with profits nearing $12 million, Printronix moved to expand its product line.
In 1982, the company unveiled two new products, the multifunction Taskmaster MVP2 printer and the Intelligent Graphics Processor (IGP). The MVP, targeted at the small business and office markets, filled in the low-end of the printer line, printing at 150 lines per minute and offering the then-unique ability to switch among word processing, data processing, graphics, and plotting applications. The IGP system, which could be retrofitted to the P series installed base and factory-installed on new units, offered enhancing graphics processing/printing capacity. The following year, Printronix acquired Massachusetts-based Data Printer, Inc., manufacturer of high-speed band printers, adding first a high-end, 1,200 lines per minute printer and then a 2,000 lines per minute model to the company’s product line. The acquisition helped boost Printronix sales, from $78 million in 1983 to more than $116 million in 1984. By then, Printronix controlled between 60 and 88 percent of the low-, medium-, and high-speed line printer markets.
Hammered in the 1980s
But new computer technologies began to emerge in the early 1980s. IBM introduced its first personal computer in 1983, sparking demands for new types of smaller, consumer-oriented, serial matrix printers. This market, which sold primarily through the retail channel, was quickly exploited by Japanese manufacturers, including Epson and Okidata. With the rise of the PC, sales in the minicomputer and microcomputer markets began to stagnate. In 1984, Printronix attempted to enter the new personal printer market with the acquisition, for $8.7 million in stock, of Anadex, Inc., a California manufacturer of serial matrix printers with about $30 million in sales. Within a year of the acquisition, however, Anadex’s sales dropped by some 70 percent, as the entire computer industry, buffeted by a new recession, collapsed in the middle of the 1980s.
At Printronix, we believe that time alone will obsolete a product, even if the competitors do not. That’s why we continually develop all Printronix products and their technologies to higher performance levels—it’s our way of Investing For The Future.
Having grown to 1,200 employees, Printronix was forced to lay off more than 250 people in 1985. The Anadex acquisition helped the company’s revenues near $150 million that year. But, unable to penetrate the retail market dominated by Japanese printer makers, and missing the newly emerging laser printer market, the company’s sales of PC-oriented printers dropped. Coupled with stagnation in the line printer market, Printronix began facing losses. To shore up operations, the company moved some of its manufacturing to Mexico and opened a production facility in Singapore. The following year, the company consolidated its Anadex subsidiary, closing its plant and forcing Printronix to take a nearly $7 million writeoff. As sales slipped to $132 million, the company’s losses, further deepened by the costs of moving its manufacturing operations overseas, reached $11.7 million for 1986, marking the company’s first-ever annual loss.
The company moved to counter its losses by diversifying its product line. In July 1986, Printronix introduced its first laser printers, a high-volume printer and a lower-priced desktop printer. The company also unveiled a new generation of line printers, with speeds ranging from 200 lines per minute up to 1,200 lines per minute. Printronix also attempted to enter the band printer market with a printer capable of speeds up to 2,000 lines per minute. But the company failed in that attempt; taking a $5.1 million inventory and equipment writedown, the company’s revenues continued to sag, to $123.6 million, and Printronix again posted a loss in 1987, of $4.9 million.
By the end of the decade, sales of personal computers had overtaken the rest of the computer market. With sales of mainframe and minicomputers shrinking, Printronix restructured the company to enable Printronix, as Kleist wrote in the company’s 1989 annual report, “to become profitable at a lower level of sales.” Printronix abandoned its diversification effort, focusing instead on the company’s core midrange printer market. Two California manufacturing plants were closed and the Dutch subsidiary was converted from manufacturing to providing distribution facilities for the European market. With lower production costs, Printronix was able to climb back into the black. After posting a new $4.4 million loss on 1989’s $135 million in sales, the company managed a profit of more than $3.5 million in 1990, despite a drop in sales to $125 million. The dawn of a new recession, however, quickly dashed Printronix’s hopes for sustaining its profitability.
Retooled for the 1990s
The recession cut deeply into Printronix. Sales dropped to $107 million in 1991 and bottomed out at $88.5 million in 1992. Losses also mounted, from $1.8 million in 1991 to nearly $8.5 million in 1992. But by then the company had already initiated a series of steps designed to retool the company and return it to profitability. The first of these involved shifting its laser technology back to the midrange market, with the launch of a continuous-form laser in 1991 and cut-sheet laser in 1992. In that year, also, the company extended its industry-leading bar-coding capacity into thermal printing, adding the first in a line of label printers. At the same time, Printronix began development of its PSA technology, including an emphasis on developing font sets for the Asian market. By 1993, the company launched the fourth generation of its line matrix technology, allowing the company to seize back that market; over the next three years, its share of the market grew from 25 to 40 percent.
Next, Printronix moved to control costs by outsourcing some of its manufacturing operations to other companies, including hiring Texas Instruments to provide printed circuit boards. By 1994, sales were on the rise again, reaching $107.4 million, and the company showed a profit of $2.3 million. But Printronix was not the only manufacturer in the computer industry beginning to see the value of outsourcing. In 1994, IBM abandoned its own printer manufacturing efforts and instead signed a three-year contract with Printronix to provide private label printers bearing the IBM name. A second contract that year added the Printronix line of printers under the Unisys brand name. The following year, Printronix signed a three-year contract with Hewlett Packard to provide that company’s line of matrix printers. These contracts helped boost Printronix’s sales to $146.6 million in 1995 and $159 million in 1996, with net profits of around $7 million for both years.
Printronix’s future looked bright for the remaining years of the century. The launch of the company’s Chinese font set scheduled for 1997 was expected to tap strongly into a potentially huge market. Font sets for Vietnamese and Hindi language printers were also being prepared, as the company forecasted sales in Asia, then accounting for ten percent of the company’s sales, to grow by 300 percent within the year. Unveiling its latest generation of printer families in 1996, and predicting that these new products would account for 75 percent of the company’s 1997 revenues, Printronix seemed likely to maintain its position at the top of the midrange printer market.
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Jones, John A., “Printronix Drives Up Sales of Rugged Computer Printers,” Investor’s Business Daily, July 14, 1995, p. B12.
Lazzareschi, Carla, “Printronix Hopes To Rebound with a Diversified Line,” Los Angeles Times, July 13, 1986, part 4, p. 1.
McKendrick, Joseph E., “Making an Impact: Printronix Sticks with Midrange Printer Market through Thick and Thin,” Midrange Systems, October 1, 1991, p. 15.
“Printronix, Inc.: Reaping the Rewards of Innovation,” Dun’s Review, March 1981, p. 44.
Tan, Audrey, “Printronix Expects Huge Jump in Asia-Pac Sales,” Business Times (Singapore), November 13, 1996, p. 2.
—M. L. Cohen